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BioTelemetry, Inc. Reports Third Quarter 2016 Financial Results

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MALVERN, Pa., Nov. 02, 2016 (GLOBE NEWSWIRE) -- BioTelemetry, Inc. (NASDAQ: BEAT), the leading wireless medical technology company focused on the delivery of health information to improve quality of life and reduce cost of care, today reported results for the third quarter ended September 30, 2016.

Company Highlights

  • Recognized highest quarterly revenue in Company's history of $53.1 million, a 22% increase over the prior year
  • Recorded $4.1 million GAAP net income for the third quarter
  • Realized highest quarterly adjusted EBITDA in Company's history of $12.2 million, a 40% increase over the prior year
  • Experienced 9% year over year growth in patient volume
  • Generated $26.4 million of cash from operations year to date, the highest in the Company's history
  • Repaid $11.5 million of revolving debt in early October
  • Received positive coverage decision from Anthem for use of MCT for certain patients

President and CEO Commentary

Joseph H. Capper, President and Chief Executive Officer of BioTelemetry, Inc., commented: "With our strong third quarter results, we delivered our seventeenth consecutive quarter of year over year revenue growth and our seventh consecutive quarter of year over year net income growth.  Our commitment to our core operating principles continues to deliver outstanding results, as evidenced by our 40% adjusted EBITDA growth.  Our top line momentum, with 22% growth, was driven by the success of our sales strategy to be the single source provider of cardiac monitoring solutions.  As a result, we continue to grow substantially faster than the market, posting 9% patient volume growth, highlighted by double digit MCT growth.  Additionally, our second quarter acquisitions had a positive impact on both our top and bottom lines.     

"BioTelemetry is on track to deliver record results for 2016, and we expect to achieve the higher end of our adjusted EBITDA guidance of $44 to $46 million.  Looking forward to 2017, we expect the Company's growth to continue to outpace the cardiac monitoring industry.  This will be driven, in part, by the expansion of our unmatched product portfolio with the upcoming launch of our next generation device, the MCOTTM Patch, and by maximizing the opportunity to now service certain Anthem patients with MCT.  We are also uniquely positioned to capitalize on other opportunities to use our technology to improve patient care and lower costs.  With our proven strategy and strong performance, we are confident that our growth will continue into 2017."        

Third Quarter Financial Results

Revenue for the third quarter 2016 was $53.1 million compared to $43.5 million for the third quarter 2015, reflecting an increase of $9.6 million, or 22.0%.  Healthcare revenue increased $4.7 million due to increased patient volumes and higher patient pricing due to a favorable product mix as well as higher MCT Medicare pricing.  Research revenue increased $4.9 million, due to the acquisition of VirtualScopics during the second quarter. 

Gross profit for the third quarter 2016 increased to $32.9 million, or 61.9% of revenue, compared to $26.3 million, or 60.6% of revenue, for the third quarter 2015.  The increase in gross margin percentage was due to Healthcare volume efficiencies, higher Healthcare pricing as well as reduced costs related to shipping and device communications.  These increases were partially offset by the impact of our acquisitions, which caused a shift in our revenue mix toward Research which carries a lower margin than our Healthcare business.

On a GAAP basis, operating expense for the third quarter 2016 was $27.9 million, compared to $23.3 million for the second quarter 2015.  On an adjusted basis1, operating expense for the third quarter 2016 was $25.5 million compared to $21.9 million for the third quarter 2015.  The adjusted operating expense excludes $2.4 million of other charges for the third quarter 2016 primarily related to patent litigation and the integration of the second quarter acquisitions and $1.4 million for the third quarter 2015 primarily related to patent litigation. The increase in adjusted expense was driven by the addition of $2.0 million related to our acquired companies, a $1.0 million increase in employee related expense, a $0.3 million increase in bad debt expense and $0.3 million of additional consulting expense primarily related to ongoing product development.

Interest and other loss, net was $0.6 million for the third quarter 2016 compared to $0.4 million for the third quarter 2015.  The increase was primarily due to higher interest expense stemming from borrowings under the revolving credit facility.

On a GAAP basis, net income for the third quarter 2016 was $4.1 million, or $0.14 per diluted share, compared to net income of $2.5 million, or $0.08 per diluted share, for the third quarter 2015.  Excluding the $2.4 million of other charges1, adjusted net income for the third quarter 2016 was $6.5 million, or $0.21 per diluted share.  This compares to adjusted net income of $3.9 million, or $0.13 per diluted share, for the third quarter 2015, which excludes the impact of $1.4 million of other charges.

Liquidity

As of September 30, 2016, total cash was $32.3 million, an increase of $6.8 million compared to June 30, 2016.  During the quarter ended September 30, 2016, the Company generated $8.9 million of cash from operations.  In addition, the Company used $2.8 million of cash during the quarter for capital expenditures, primarily medical devices.  Consolidated days sales outstanding decreased to 48 days as of September 30, 2016, down from 49 days as of June 30, 2016.

As of September 30, 2016, the Company had total indebtedness of $37.4 million.  On October 11, 2016, the Company repaid $11.5 million of the outstanding borrowings under the revolving credit facility.

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1
 The Company believes that its adjusted financial results, which exclude Other charges, offer a meaningful representation of the Company's performance as they exclude expenses that are not necessary to support the Company's ongoing business.  

Conference Call 
BioTelemetry, Inc. will host an earnings conference call on Wednesday, November 2, 2016 at 5:00 PM Eastern Time.  The call will be simultaneously webcast on the investor information page of our website, www.gobio.com.  The call will be archived on our website for two weeks. 

About BioTelemetry
BioTelemetry, Inc., formerly known as CardioNet, Inc., is the leading wireless medical technology company focused on the delivery of health information to improve quality of life and reduce cost of care.  The Company currently provides cardiac monitoring services, original equipment manufacturing with a primary focus on cardiac monitoring devices and centralized cardiac core laboratory services.  More information can be found at www.gobio.com.

Cautionary Statement Regarding Forward-Looking Statements
This document includes certain forward-looking statements within the meaning of the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995.  These statements may be identified by words such as "expect," "anticipate," "estimate," "intend," "plan," "believe," "promises" and other words and terms of similar meaning.  Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including important factors that could delay, divert, or change any of these expectations, and could cause actual outcomes and results to differ materially from current expectations.  These factors include, among other things, our ability to successfully integrate acquisitions into our business and the effect such acquisitions will have on our results of operation, effectiveness of our cost savings initiatives, relationships with our government and commercial payors, changes to insurance coverage and reimbursement levels for our products, the success of our sales and marketing initiatives, our ability to attract and retain talented executive management and sales personnel, our ability to identify acquisition candidates, acquire them on attractive terms and integrate their operations into our business, the commercialization of new products, market factors, internal research and development initiatives, partnered research and development initiatives, competitive product development, changes in governmental regulations and legislation, the continued consolidation of payors, acceptance of our new products and services, patent protection, adverse regulatory action, and litigation success.  For further details and a discussion of these and other risks and uncertainties, please see our public filings with the Securities and Exchange Commission, including our latest periodic reports on Form 10-K and 10-Q.  We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.

  
  
 Three Months Ended
Consolidated Statements of Operations(unaudited)
(In Thousands, Except Per Share Amounts)    
  September 30,
2016
 September 30,
2015
     
Revenues$53,055  $43,492 
Cost of revenues 20,189   17,155 
Gross profit 32,866   26,337 
Gross profit %   61.9%    60.6%
     
Operating expenses:   
General and administrative 13,853   11,497 
Sales and marketing 7,018   6,632 
Bad debt expense 2,495   2,245 
Research and development 2,137   1,565 
Other charges 2,397   1,392 
Total operating expenses 27,900   23,331 
     
Income from operations 4,966   3,006 
Interest and other loss, net (630)  (391)
     
Income before income taxes 4,336   2,615 
Provision for income taxes (235)  (137)
Net Income$4,101  $2,478 
     


Net income per share:
   
Basic$0.15  $0.09 
Diluted$0.14  $0.08 
    
Weighted average number of common shares outstanding:     
Basic 28,102   27,181 
Diluted 30,334   29,311 
    


  
 Nine Months Ended
Consolidated Statements of Operations(unaudited)
(In Thousands, Except Per Share Amounts)    
  September 30,
2016
 September 30,
2015
     
Revenues$154,375  $131,739 
Cost of revenues 57,961   53,446 
Gross profit 96,414   78,293 
Gross profit % 62.5%  59.4%
     
Operating expenses:   
General and administrative 40,577   35,100 
Sales and marketing 21,687   20,741 
Bad debt expense 7,797   6,769 
Research and development 5,888   5,161 
Other charges 5,844   4,462 
Total operating expenses 81,793   72,233 
     
Income from operations 14,621   6,060 
Interest and other loss, net (1,686)  (1,220)
     
Income before income taxes 12,935   4,840 
Provision for income taxes (529)  (260)
Net Income$12,406  $4,580 
     
Net income per share:   
Basic$0.45  $0.17 
Diluted$0.42  $0.16 
    
Weighted average number of common shares outstanding:     
Basic 27,811   27,063 
Diluted 29,857   29,019 
    


   
Summary Financial Data
(In Thousands, except days sales outstanding) 
           
   September 30, 
2016
  December 31,
2015
 (unaudited) (unaudited)
    
Cash and cash equivalents$32,255  $18,986 
Healthcare accounts receivable, net 15,654   15,179 
Other accounts receivable, net 12,794   8,997 
Days sales outstanding 48   47 
Working capital 25,657   23,157 
Total assets 165,211   124,143 
Total indebtedness 37,414   23,582 
Total shareholders' equity 95,032   75,926 
    


Reconciliation of Non-GAAP Financial Measures
(In Thousands, Except Per Share Amounts)

In accordance with Regulation G of the Securities and Exchange Commission, the table set forth below reconciles certain financial measures used in this press release that were not calculated in accordance with generally accepted accounting principles, or GAAP, with the most directly comparable financial measure calculated in accordance with GAAP.  The Company believes that its adjusted financial results, which exclude Other charges, offer a meaningful representation of the Company's performance as they exclude expenses that are not necessary to support the Company's ongoing business.  

 Three Months Ended
(unaudited)
 September 30,
2016

 September 30,
2015
Income from operations – GAAP$4,966  $3,006 
Other charges (a) 2,397   1,392 
Adjusted income from operations$ 7,363  $   4,398 
        
Net income – GAAP$4,101  $2,478 
Other charges (a) 2,397   1,392 
Adjusted net income$6,498  $ 3,870 
          
Net income per diluted share – GAAP$0.14  $0.08 
Other charges per diluted share (a) 0.07   0.05 
Adjusted net income per diluted share    $0.21  $     0.13 
          
          
   Three Months Ended
 (unaudited)
    
 September 30,
2016
 September 30,
2015
    
Cash provided by operating activities$8,879  $4,164 
Capital expenditures (2,815)  (3,641)
Free cash flow$6,064  $523 
        


  

  Three Months Ended
 (unaudited)
    
 September 30,
2016
 September 30,
2015
    
Net income – GAAP$4,101  $2,478 
Provision for income taxes 235   137 
Interest, other loss (net) 630   391 
Other charges (a) 2,397   1,392 
Depreciation and amortization expense     3,689   3,165 
Stock compensation expense 1,138   1,139 
Adjusted EBITDA$12,190  $8,702 

(a) In the third quarter 2016, the Company incurred $2.4 million of other charges primarily due to patent litigation and the acquisitions completed in the second quarter.  In the third quarter 2015, the Company incurred $1.4 million of other charges primarily related to patent litigation.


Reconciliation of Non-GAAP Financial Measures
(In Thousands, Except Per Share Amounts)

In accordance with Regulation G of the Securities and Exchange Commission, the table set forth below reconciles certain financial measures used in this press release that were not calculated in accordance with generally accepted accounting principles, or GAAP, with the most directly comparable financial measure calculated in accordance with GAAP.  The Company believes that its adjusted financial results, which exclude Other charges, offer a meaningful representation of the Company's performance as they exclude expenses that are not necessary to support the Company's ongoing business.  

 Nine Months Ended
(unaudited)
 September 30,
2016
 September 30,
2015
Income from operations – GAAP$14,621  $6,060 
Other charges (a) 5,844   4,462 
Adjusted income from operations$    20,465  $  10,522 
        
Net income – GAAP$12,406  $4,580 
Other charges (a) 5,844   4,462 
Adjusted net income $    18,250  $  9,042 
    
Net income per diluted share – GAAP$0.42  $0.16 
Other charges per diluted share (a) 0.19   0.15 
Adjusted net income per diluted share    $     0.61  $    0.31 
    


  
   Nine Months Ended
 (unaudited)
    
 September 30,
2016
 September 30,
2015
    
Cash provided by operating activities        $26,405  $7,153 
Capital expenditures (8,507)  (10,310)
Free cash flow$17,898  $(3,157)


  
  Nine Months Ended
 (unaudited)
    
 September 30,
2016
 September 30,
2015
    
Net income – GAAP$12,406  $4,580 
Provision for income taxes 529   260 
Interest, other loss (net) 1,686   1,220 
Other charges (a) 5,844   4,462 
Depreciation and amortization expense     10,619   9,124 
Stock compensation expense 3,757   3,321 
Adjusted EBITDA$34,841  $22,967 

(a) In the first three quarters of 2016, the Company incurred $5.8 million other charges primarily due to patent litigation and the acquisitions completed in the second quarter.  In the first three quarters of 2015, the Company incurred $4.5 million of other charges primarily due to patent litigation as well as costs related to the integration of the 2014 acquisitions. 

Contact: BioTelemetry, Inc. Heather C. Getz Investor Relations 800-908-7103 investorrelations@biotelinc.com

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